Exploring the Impact of Policy Instruments on Global Value Chain Integration: An FDI-Based Study of South Asia’s BRI Economies
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This study examines the impact of trade, finance, taxation, market dynamics, and legal policies on firm integration into global value chains (GVCs) through foreign direct investment (FDI) in five South Asian BRI economies: Afghanistan, Bhutan, the Maldives, Nepal, and Pakistan. Using data from 819 firms (2016–2021) and a treatment effect model, it evaluates seven policy scenarios based on economic integration and institutional economics. The findings indicates that international management contracts (β = 0.406, p < 0.001), tax incentives (β = 1.218, p = 0.003) and trade facilitation improvements (β = 1.021, p = 0.027) significantly enhance GVC participation, while restrictive home country outward FDI regulations reduce participation (β = −2.332, p = 0.009). Findings highlight the effectiveness of targeted policy interventions in enhancing FDI-driven GVC participation in emerging South Asian economies.
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